Product Long-term, Non-YRT

Reserve Old regulation (KMK 424/ 2003) New Regulation (PMK 53/2012) Net Level Premium/ Zillmer: Gross Premium Valuation: Premium Reserve = PV of Future Benefit PV Premium Reserve = (PV of Cash-out PV of Future Premium + amortization of 1st year Cash-in) + PAD at 75% CI expenses of minimum 30 Sum Assured Discount rate used is maximum at average of Discount rate used is maximum at 9% (IDR), : average 3 years Yield of Government bond 5% (USD) (benchmark series) + 0.5% Reserve = UPR + IBNR + RNYA UPR should be higher or equal to 40% of Net Premium Reserve = UPR + IBNR + RNYA UPR = Max { UPR pro-rate, URR} UPR pro-rate should be higher or equal to pro-rate of Net of Comm Gross Premium (daily basis) o Comm max = 20% * Gross Premium URR = Unexpired Loss + Unexpired Expense + 75% PAD Subject to: (a) No Negative Reserves, (b) Reserve > Premium Refund

Short-term, YRT

I.

Short-term (up to 1 year) and Renewable Products

a. Method: The maximum between Unearned Premium Reserve and Unexpired Risk Reserve ST Reserve = Max (UPR; URR), where: UPR = (365 t )/365 x Gross Premium x (1 15% commission) URR = (365 t )/365 x Gross Premium x (Loss Ratio% x (1+PfAD%) + Expense Ratio%) The reserve is net of reinsurance Long-Term and Non-Renewable Products a. Method: Projected Net Cash-Flow (Gross Premium Valuation) b. Assumptions: Best-Estimate + PfAD c. Best Estimate Assumptions: Valuation Mortality Table Product Type Individual Life Group Life Credit Life (MRTA) TPD Critical Illness Expense Assumptions Product Type Acquisition Maintenance Mortality/Morbidity 100% CSO 1980 Ultimate 100% CSO 1980 Ultimate 100% Reinsurance Rate (ScoRe Vie) 100% TPD Ultimate 100% Critical Illness Ultimate

II.

per policy Non-Par IDR - Credit Life - Legacy Products - Regular Pay Unit Link Non-Par USD - Regular Pay Unit Link Par IDR - Group Endowment - Individual Endowment Par USD - Group Endowment - Individual Endowment Lapse Assumptions Product Type Non-Par IDR - Credit Life - Legacy Products Par IDR - Group Endowment - Individual Endowment Par USD - Group Endowment - Individual Endowment Lapse rate Regular Pay Unit Link (IDR and USD) Y-1 0 48 0 48 0 96 Y-1 25 200,000

% premium 5% 60% (Basic)/ 2% Top-UP 60% (Basic)/ 2% Top-UP 5% 5% -

per policy 7,000 10,000 100,000

% premium 5% 3% (Basic)/ 2% Top-UP 3% (Basic)/ 2% Top-UP 3% 5% 3% 5%

20

10

10,000 10,000 1 1

Lapse rate Y-2 0 18 0 18 0 40 Y-2 15

Y-3 .. 0 5 0 5 0 20 Y-3 12

Y-1 0 12 0 12 0 21 Y-4 5

PUP rate Y-2 0 5 0 5 0 10 Y-5 5

Y-3 .. 0 5 0 5 0 5 Y-6.. 5

d. Provision for Adverse Deviation (PfAD)* PfADs Mortality Renewal Expenses Lapse
* PfAD is used as multiplication factor **for new RBC calculation purposes

75% Confidence level 10% 10% +/-15%

95% Confidence level** 10% 10% +/-15%